Struggling to convert its popularity among PDA hipsters into increased
revenues, wireless software firm AvantGo, Inc. is making
the inevitable free-to-fee jump for its content service.

The Hayward, Calif.-based AvantGo won't scrap the free 2MB version of its
service, which pipes content and applications to millions of PDA users but
the plan is to charge
$19.95 a year for access an expanded 8MB version.

AvantGo is rolling out the premium expanded channel capacity option at a
time when consumer-focused plays are moving swiftly to implement premium
add-ons to existing free services to compensate for revenue shortfalls.

In the case of AvantGo, revenues have been slipping dramatically in the most
recent quarters. The company, which makes money from license agreements
with corporate clients and services agreements with consumers, collected
$5.3 million at the end of June this year, a sharp drop off from the $6.5
million in revenues in the same quarter the previous year.

AvantGo blamed 18 percent decline in revenues from the same year-ago quarter
on the overall downturn in the economy which has reduced capital spending on
technology, including mobile enterprise software and professional services.

In its most recent regulatory filing, the company said sales of licenses and
associated services, and sales of advertising have been negatively impacted
its bottom line.

"Looking ahead, we expect this to be the first in a series of value-added
solutions to enhance the power and utility of this popular service," AvantGo
CEO Richard Owen said of the premium push.

It comes just a few months after the company raised the ire of small Web
site operators with plans to charge for
its custom channels for sites with more than eight subscribers.

AvantGo had previously offered free the channel option for individual users
who wished to use it for personal use, but apparently businesses went a bit
overboard with it, prompting the firm to revise its Custom Channel policy as
of Feb. 20. After objections were raised by small site operators, the
company scrapped the plan.

The company claims more than 6 million registered users for its content
channel services. It makes money primarily from licensing revenues for its
AvantGo M-Business Server products, which are typically based on fixed-fee
agreements.

The bulk of its service revenues come from the AvantGo Mobile Internet
Service, generated through placement, subscription and advertising revenues,
and revenue sharing arrangements.